Bonobos is a leading e-commerce driven men’s apparel brand focused on delivering great fit, a fun approach to style, and superb customer experience. Launched in 2007 on the internet with better-fitting men’s pants, today bonobos offers a full assortment of men’s clothing and has since become the largest apparel brand ever built on the web in the US. Just as their product offering has evolved, so has Bonobos’ business model, expanding offline in 2012 with the introduction of e-commerce stores, called guideshops.

The Challenge: No Easy Access to Customer Lifetime Value

Bonobos has always been a data-driven, customer-focused retailer. As such, it has always recognized the importance of knowing and making business decisions around Customer Lifetime Value (CLV). Initially the marketing team had used Excel to compute lifetime value metrics, but as the company experienced rapid growth and its customer base grew substantially, this became prohibitively time-consuming and tedious – so the analysis was not completed as frequently as the team would have liked.

Not having access to real-time CLV insights made it difficult for Bonobos to make agile decisions about customer acquisition. Additionally, after years of focusing on growing the reach of its brand, Bonobos realized that it needed to place stronger emphasis on improving the engagement and retention of existing customers. To that end, Bonobos knew that measuring the health of its customer base accurately on a regular basis was essential.

Using Custora’s predictive analytics platform, Bonobos’ senior leadership and its entire marketing team have immediate access to the CLV figures of their customer base overall, as well as the CLV of 25 customer segments.

One such segment is customer acquisition channel. Custora’s statistical models analyze the lifetime value of customers acquired through every marketing channel Bonobos employs to acquire new customers. The analysis allows Bonobos to understand which acquisition channels are bringing in the most valuable customers, and optimize their acquisition strategy accordingly – in terms of both budget and team resource allocation.

For example, Bonobos discovered that its Guideshops, service-oriented e-commerce stores that enable men to try on Bonobos clothing in person before ordering online, were bringing in customers with the highest lifetime value across all of its marketing channels. This insight encouraged Bonobos to expand its marketing efforts to support the Guideshops.

Another customer segment that is particularly powerful for Bonobos is high-value customers. Bonobos uses Custora’s predictive CLV analysis to identify their top customers as early as their first purchase. Bonobos uses this information to ensure their top customers – and future top customers – are getting the attention they deserve.

The ability to identify high-value customers has transformed Bonobos’ approach to relationship marketing. “Top customers” receive additional services, such as handwritten thank you notes from the Bonobos customer service team. Using Custora, Bonobos measured the impact of these notes on incremental revenue and repeat purchase rate, and saw a positive lift. Top customers also receive perks such as exclusive event invites and early access to new merchandise.

Over the past six months, Custora’s insights into which channels are attracting Bonobos’ highest-value shoppers has helped Bonobos increase the predicted lifetime value of its new customers by 20%.

“For a growing brand, smart marketing investments are rooted in understanding the relationship between the cost to acquire a customer and that customer’s lifetime value,” said Craig Elbert, VP of Marketing for Bonobos. “With Custora, we gain valuable and rapid insights on which channels are a source for high quality customers – allowing us to adjust our resource allocation accordingly.”